According to the Turkish Statistical Institute (TÜİK), the third quarter economic growth figures covering the period of July-September 2024 have been revealed. The initial estimate for the GDP growth in the third quarter of 2024 increased by 2.1% compared to the same quarter of the previous year in terms of chained volume index. However, the seasonally and calendar-adjusted GDP chained volume index decreased by 0.2% compared to the previous quarter. Experts had anticipated a 0.2% contraction in the third quarter and a 2.5% annual growth.
ECONOMY CONTRACTS FOR TWO CONSECUTIVE QUARTERS
While the growth rate announced as 2.5% in the second quarter of this year was revised to 2.4%, the quarterly growth rate of 0.1% for the second quarter was revised to a 0.2% contraction. With the revisions made to the second quarter data, the Turkish economy has contracted for two consecutive quarters. The increase in interest rates and monetary tightening have led to a slowdown in the growth momentum.
INDUSTRY SECTOR SHRINKS, CONSTRUCTION GROWS RAPIDLY
When examining the activities comprising the GDP, in the third quarter of 2024 compared to the previous year, the chained volume index increased by 9.2% for construction, 6.2% for financial and insurance activities, 4.6% for the agriculture sector, 2.5% for real estate activities, 2.3% for taxes on products minus subsidies, 2.2% for information and communication activities, 1.9% for public administration, education, human health, and social work activities, and 1.4% for services. On the other hand, other service activities decreased by 2.4%, the industry sector by 2.2%, and professional, administrative, and support service activities by 0.3%.
HOUSEHOLD CONSUMPTION INCREASES
The final consumption expenditure of resident households in the third quarter of 2024 increased by 3.1% in terms of chained volume index compared to the same quarter of the previous year. The government’s final consumption expenditure decreased by 0.9%, while gross fixed capital formation decreased by 0.8%. Goods and services exports increased by 0.8% in the third quarter of 2024 compared to the same quarter of the previous year, while imports decreased by 9.6%.
LABOR PAYMENTS INCREASE
Labor payments increased by 76.3% in the third quarter. The share of labor payments in Gross Value Added was 36.4%. This figure was 31.9% in the same period last year. The share of labor payments in GDP decreased by 4 percentage points.
LABOR’S SHARE OF GDP DECREASES BY 4 POINTS
Labor payments increased by 76.3% in the third quarter of 2024 compared to the same quarter of the previous year. Net operating surplus/mixed income increased by 45.7%. The share of labor payments in Gross Value Added at current prices was 40.4% in the third quarter of the year, while this ratio decreased to 36.4% in the third quarter. The share of net operating surplus/mixed income increased from 38% to 45.1%.
Impact of Economic Growth Figures on Turkish Market
The revelation of the third quarter growth figures has had a significant impact on the Turkish market. The contraction in the economy for two consecutive quarters has raised concerns among investors and policymakers. The decrease in industrial activities coupled with the rapid growth in the construction sector has highlighted the need for strategic interventions to stabilize the economy.
Challenges and Opportunities for the Turkish Economy
The challenges faced by the Turkish economy, such as the decline in industrial output and the increase in labor payments, present opportunities for restructuring and diversification. By focusing on sectors with growth potential and enhancing productivity, Turkey can overcome the current economic challenges and pave the way for sustainable development.
Government Response to Economic Slowdown
In response to the economic slowdown, the Turkish government has announced plans to implement fiscal measures aimed at stimulating growth and attracting investment. By fostering a supportive business environment and addressing key structural issues, the government aims to revitalize the economy and foster long-term prosperity for all citizens.
Overall, the third quarter growth figures reveal both the challenges and opportunities facing the Turkish economy. By implementing strategic reforms and fostering innovation, Turkey can navigate through the current economic challenges and emerge stronger and more resilient in the global market.
